The fourth annual survey of UK defined benefit (DB) schemes with assets over £1billion has found just three per cent are still open to new members.

The survey, by independent consultancy Barnett Waddingham, showed 64% of final salary schemes are closed to new members and a further 33% are also closed to future accrual, leaving just three per cent open to new members.

It also found a greater proportion (35%) of Career Average Revalued Earnings (CARE) schemes remain open to new members.

The survey also revealed 67% of schemes have a deficit on their company accounting basis, which is lower than last year, when 75% of schemes were in deficit.

Schemes with a lower or no deficit may be more able to secure their liabilities with an insurance company.

The average annual contribution made by sponsoring employers to fund their scheme deficit was around £97m.

The variation in deficit contributions was substantial, ranging from around £3m to £1,500m.

One large company recently announced its intention to pay a single contribution into their defined benefit scheme representing the acceleration of 10 years of contributions that had already been agreed.

Andrew Vaughan, partner at Barnett Waddingham, said: "The private sector's big schemes are the industry's trendsetters, and activity we are currently seeing now, such as the removal of longevity risk and liability driven investment strategies, will inevitability work their way down to smaller schemes.

"Only a handful of big defined benefits schemes remain open to new members and the number closed to future pension accrual is increasing year on year."

Vaughan added that many of these will ultimately be looking to the insurance market to transfer risk through buy-outs or buy-ins, medical underwriting and longevity risk transfers.

We have seen a significant amount of activity in these markets in the last year and we expect this to continue."

First published 26.05.2016

Lindsay.sharman@wilmingtonplc.com